By Xinhua writers Zheng Qihang, Wu Mei
BERLIN, July 19 (Xinhua) -- A German expert prescribes debt restructuring coupled with stimulus package to revive the Greek economy ahead of a special EU summit on the debt crisis amid fears of further contagion.
"The only way to get out off this crisis would be debt restructuring in Greece," said Prof. Chritian Dreger, head of department at Macro Analysis and Forecasting in the German Institute for Economic Research.
He said the private sector should also participate in this debt restructuring, noting that German banks have already announced that they are able to manage a partial default of Greek government bonds.
The debt crisis has "deepened the slowdown of Greece that makes Greek economy fall by 4.5 percent this year and probably we will have a negative growth rate next year," he said.
"This means we can not continue with the strategy we have so far," said Dreger.
His remarks were echoed by Martin Blessing, the chief executive of Commerzbank, Germany's second largest lender. "Greece needs debt restructuring or partial debt relief," said Blessing last Tuesday.
According to the banker, Commerzbank can bear a 30-percent haircut on Greek debt.
A poll released on German television on Friday shows 63 percent of Germans are against offering more credits to Greece.
Dreger said the solution, which may prove to be painful, is currently hard to be accepted by Germany, France and the European Central Bank.
"Perhaps we will continue to give Greece new credits," which, however, won't cure the root problem of the eurozone," he said.
"In fact it will worsen the European debt crisis," he added.
To repair Greece's ability to repay the debts, Dreger proposed a stimulus program for Greece along with the debt restructuring.
"We need investment programs for Greece from the rest of European countries." He said.
This could entail opportunities for other countries to invest in Greece, and Greece needs to become more transparent and make reforms in labor market and so on, he said.
European top leaders will meet on Thursday in Brussels in a snap summit to discuss the financial stability of the eurozone and further aid for Athens.
